Investing wisely

Investing wisely

Investing wisely

Many of us are flummoxed when it comes to deciding on the right time to invest in a property and choosing an area that is the best bet. With the ongoing turmoil in the real estate sector, it has made buying a property an imminent desire for several such fence-sitters.

Weak customer sentiments that has been triggered by exorbitant properties and stacking unsold inventory has led to what the buyers had called for — price correction in major micro-markets of metro cities.

Bengaluru has also started to witness the brunt of diminishing demand from investors in the last two years. However, as it is finally heading towards a price correction mode, developers are expecting better sales volume in 2016. However, the City has largely been cocooned from the grim market situations due to the presence of a bustling IT industry and this has created a large number of end-users. This is the main reason as to why the focus of the minimal existing home buyers have been towards the City’s IT hubs or well-connected localities.

For those who are planning to bounce back with real estate investments in 2016, it is imperative to be venturesome and yet cautious at the same time. Take time to consider the various areas and factors that will help it grow. To ease the confusion, let’s take a look at the factors to ponder upon before buying a home.

Areas to focus on

In Bengaluru, investors must also focus on a locality’s proximity to IT hubs as this is  where the maximum demand from the on-hold home buyers is expected to mushroom. However, consider thinking beyond the conventional investment hotspots of Whitefield and Electronic City. South Bengaluru’s IT hub, Electronic City, has been swarmed by housing projects and might witness further price correction due to existing owners resorting to desperate exit routes.

Thanisandra towards the North and localities along the International Airport Road such as Hebbal, Rachenahalli and Yelahanka are expected to be good bets for investments this year. While Thanisandra can be considered for purchase of apartments, other localities are expected to reap healthy returns on plotted developments. Thanisandra, in particular, is already a coveted residential destination, as it is close to the Manyata Tech Park and Bhartiya City. However, the paucity of land parcels and the lack of new project launches is expected to widen the demand-supply gap and reflect on property rates here. Thanisandra recorded a price appreciation of more than 10 per cent in 2015 and it is expected to continue this year as well.

Another area that might prove profitable for investors is Varthur Road in East Bengaluru. Situated close to Whitefield, the locality is expected to witness housing demand that will spill over from the over-priced residences located near the IT hub. Moreover, with majority of land in Whitefield allotted for industrial development, both developers and buyers have started looking beyond it. Compromised road infrastructure is another dampener for residential real estate in Whitefield.

Along the metro

In addition to the proximity to IT hubs, investors can also focus on localities which are expected to enjoy enhanced connectivity by the Metro in the coming months. Dampened by poor road network, the City is seeing a lot of offices moving towards places that are easily connected by the metro.

The two metro lines that are running between Baiyyappanahalli to Mysore Road and Peenya to Puttenahalli are being planned to be completed in multiple phases this year. These lines are going to impact not only 25 to 30 per cent of the commuters, but also the real estate markets of the connected localities. As a result, areas like Mysore Road can reap healthy returns, due to the expansion of the metro and industrial growth around it. This can make Mysore Road a prospective investment destination this year. The proposed widening and conversion to a national highway is already paving the way for changes.

While industry insiders maintain that peripheral areas in the City might prove to be beneficial for investors in 2016, they are also of the opinion that the mid-income housing segment — Rs 40 to 60 lakh — will record maximum absorption due to high demand from end-users. The luxury market in most metro cities, including Bengaluru, is expected to suffer as there will be  few or no takers and will take some time to pick up. This will continue at least until the prices come down to a realistic level and buyers begin to see
‘value for money’ in their purchase.

Price movement in suburban localities of Bengaluru in 2015

Localities    Jan-Mar 2015    Apr-Jun 2015    Jul-Sep 2015    Oct-Dec 2015     % Change
Thanisandra    4,600    5,200    5,050    5,200    13
Hebbal    5,200    5,850    5,850    5,700    10
Yelahanka    4,700    4,700    4,700    4,800    2
Mysore Road      4,100    5,150    4,700    4,200    2
Magadi Road      3,900    4,100    4,200    4,200    8
Whitefield    5,050    4,750    4,600    4,500    11
Electronic City      3,750    3,800    3,850    3,800    1
Varthur    3,500    4,600    4,300    3,900    11
Varthur Road         4,000    4,650    5,000    4,050    1

(The author is chief business officer,

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